Rise of Transit – Orientated Development

Browse through any developer’s sales brochure and the word “transitoriented development” (TOD) seem to be the rage in the property market in Kuala Lumpur. From Sungai Buloh all the way to KL Sentral, it seems every developer is name dropping the term TOD like the latest fashion trend.

With chronic traffic jams that still plague the Klang Valley and RM900 million allocated during Budget 2016 to resolve this issue, it is no wonder connectivity and TODs have become the buzzwords in the Malaysian property market.

In Kuala Lumpur, Kuala Lumpur City Hall (DBKL) is spearheading this by encouraging developers to build close to train stations to encourage more commuters to take the train to and from the city.

This had resulted in the rise of TODs all over Kuala Lumpur and Greater KL as evidenced by the many newly launched projects as well as developers who had started to acquire land parcels that are located close to MRT and LRT stations.

For example, a recent site inspection along the newly opened Ampang LRT Extension Line spanning from Awan Besar to Bandar Puteri showed a significant number of newly completed condominium projects and apartments within close range to the stations as well as upcoming residential developments.

Over at the Kelana Jaya LRT Extension Line, Sime Darby Property Bhd’s new iconic township development, Subang Jaya City Centre is located just next to the Subang Jaya LRT station with plans to connect it seamlessly to its development,

Likewise, TODs are also making inroads along the upcoming KVMRT Line from Kampung Selamat and all the way to Kajang. In the latter, for instance, the MRT station is located adjacent to Mah Sing Group’s D’Sara Sentral and SqWhere respectively.

What qualifies as TODs?

However, not all the developments that are being marketed right now are considered TODs.

At the first ever Malaysia Property Report Congress held in August in Kuala Lumpur, Kuala Lumpur City Hall (DBKL) had shared that it is offering various incentives for developers in building high-density developments.

In order to qualify for a TOD, developers can either opt for a 30% discount on development charges but by building with a higher density or with at least 30% of the development to feature a Park ‘n’ Ride scheme. This scheme involves building car parks next to train station to encourage Malaysians to park and ride the train to Klang Valley.

Not only that, according to DBKL, the development must be between 200 to 400 metres from the MRT or LRT or other train stations. In addition, it must have a seamless connection from the train station to the building similar to the Singapore model. Anything that is more than 400 metres is considered as “Transit Adjacent Development (TAD) and does not qualify for DBKL’s incentives.

How does it affect you?

Buying a TOD versus a TAD project greatly affects you as a consumer. For example, buying a TOD project can cost significantly lesser compared to a TAD. As housing affordability is a serious issue among first time home owners in KL. DBKL has set a development guideline for developers to build homes at around 800 sq ft but priced below RM450,000.

At the congress, Dr Daniele Gambero has suggested a public-private partnership for this to happen. Mohd Salem Kailany, Chief Executive Officer of PNB Development Sdn Berhad (PNBD) also agreed that this model is possible through a public-private partnership by building on government-owned land to reduce land acquisition costs, leading to lower cost when building such homes. Thus, TODs will not only reduce traffic congestions but also will help to address housing affordability within Kuala Lumpur.

Challenges

While TODs may help to reduce traffic congestions, some inherent challenges remain. One glaring example is the lack of punctuality when taking the KTM Komuter Line causing many Malaysians to turn their back on taking public transport. As a result penetration rate is extremely low at a ratio of 30:70 for public transport ratio versus cars. This is still way behind DBKL’s target of 60:40. In comparison, the penetration rate for Singapore and Hong Kong is around 80 per cent.

While penetration rate has increased significantly from the approximately 20% since 2008 due to improvements work made by Prasarana, a few key issues need to be addressed in order for TODs to truly take off in a big way in Kuala Lumpur. They include the reliability of bus feeder services, punctuality of trains plus technology that will enable commuters to know when the bus will arrive similar to the Singapore model – either the private or government sector needs to drive this via applications.

In addition, the political economy in Malaysia presents a real challenge when delivering high impact projects as it very much depends on “who you know” rather than “what you know”. This has resulted in projects being awarded to those who are politically connected.

As history has shown, this does not necessarily translate well for commuters and the public-at-large resulting in take over of the various train lines that had suffered from low ridership and connectivity issue. Only by putting the public first and a greater political will to make things work, can TODs work. Enhancing commuters’ experience from start to finish is the way forward for ridership to increase, just like the Singapore model.

Khalil Adis

Founder Khalil Adis Consultancy Pte Ltd

This article was first published in the iProperty.com Malaysia November 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!